Chapter 5: Contracts Principles
Which documents are a part of the listing package?
- Agency relationship form (AD) - More than one buyer and seller representation form (PRBS) - Wire fraud an electronic funds transfer advisory form (WFA) - Sellers advisory form
What are other addendum's to the residential purchase agreement?
- back up offer addendum (BUO) - Seller license to remain in possession addendum (SIP) - Errors and Ommissions Insurance
When does a minor become emancipated?
-legally married or was divorced -enlists or enlisted in the military - when declared to be self supporting by the courts : files an emancipation petition with the courts stating that he/she is at least 14 y/o and willingly living separate and apart from his parents/guardians with their consent or acquiescence, managing owns finances and not deriving illegal income
What is part of the purchase agreement package?
-purchase agreement and escrow instructions -Buyers inspection advisory (BIA) - Wire fraud an electronic funds transfer advisory (WFA) - The AD form
Which items are usually found in contingency clauses?
1. A person must obtain financing for a certain interest rate or less 2. A person must be approved by my CPA or attorney within 20 days. 3. Something is conditional upon inspection and approval of each apartment. 4. There must be a property appraisal at no less than a specified price.
According to the California civil code, which agreements must be in writing, according to the statute of frauds?
1. Any agreement with terms that will not be performed within one year following the making of the contract. - Anything above one year must be in writing 2. Any special promises to answer for the dept, default, or non-performance of another, except in cases provided for by the civil code. (someone is making a commitment to pay off another person's debt or take responsibility if they fail to fulfill their obligations) 3. Any agreement made upon the consideration of marriage, other than a mutual promise to marry. (Must be in writing, if it involves marriage) 4. Any agreement leasing real property for more than one year.. (One day after a year? Be in writing!) - It is also any agreement for the sale or interest of real property. - It also involves any agreements that authorizes an agent to perform any acts regarding real property. 5. Any agreement, authorizing or employing, an agent, broker, or any other person to purchase, sell, or lease real estate for more than one year. - Any agreements that a agent will find a buyer, seller, or Lessee for more than one year in return for compensation. 6. Any agreement that states an act cannot be performed during the lifetime of the promisor. : EX: any agreements that devices or bequeaths any property, - any agreements that makes provision for any reason by will 7. Any agreements made by the purchaser of real estate to pay a debt secured by a trust, deed or mortgage upon the property purchase - Unless assumption of that debt by the purchaser is specifically provided for in the conveyance of such property. (This means that when someone buys real estate, they agree to pay off any debt secured by a trust deed or mortgage on the property, unless they specifically agree to take on that debt as part of the property purchase.) EX: you will need
What are the four elements of a contract? Basically the four things that need to be considered to make any valid contract.
1. Capacity 2. Mutual consent. 3. Legality. 4. Sufficient consideration. 5. Writing sometimes required (statute of frauds)
What is part of the purchase agreement?
1. Covenants. 2. Contingencies, conditions, or subject to. 3. Addendums 4. Counter offers. 5. Inspection advisory for buyers. (BIA) 6. Wire fraud and electronics funds transfer advisory
What is key contingency?
A "key contingency" is a crucial condition or factor that must be dealt with for a plan or agreement to move forward successfully. It's important in business, contracts, or project planning because these significant variables can greatly affect the outcome. Recognizing and handling key contingencies helps reduce risks and makes strategies or agreements more effective.
What is an expressed contract?
A Contract that is expressed in words Either oral or written. - Listings, purchase agreement, and leases are all expressed contracts
What is a unilateral contract?
One party makes a promise for an act Ex: Mr. Bentley offers a reward to any person who can identify the arsonist, who set his home on fire. This Lee unilateral contract, makes Mr. Bentley required to give the reward to any person who fulfills the obligation.
What are purchase options?
Option : is a right to purchase a property upon specify terms within a specific time. Which is granted in exchange for money. BASICALLY: An option in real estate is like getting first dibs on buying a house. You pay some money to the owner for the chance to buy the house at a set price within a certain timeframe. If you decide to buy, the owner has to sell it to you. It's like reserving the house for yourself while you decide if you really want it.
A potential buyer who purchases an agreed to amount of time / money to buy a specific property upon set terms:
Optionee - REMEMBER: the optionee does not have to go through with the purchase.
Who is a property owner who gives an interested buyer an exclusive right to purchase a property?
Optionor
During periods when buyers cannot qualify for loans, options in purchases become popular because?
Options give buyers hope of obtaining financing in the future
When would outside parol evidence be used?
Parol evidence would be used in a situation if the written contract is: - incomplete -Ambiguous (open or unclear) - Or if it is necessary to show that the contract is not enforceable because of mistake or fraud
What is the parol evidence rule?
Parole evidence : Any prior oral or written agreements of the parties, or even oral agreement made during the same time (contemporaneously concurrently) as a written contract Parole Evidence Rule: The contract expressed in writing is intended to be the complete and final expression of the rights and duties of the contracting parties. - Basically any oral or written agreement made before or during the written contract will not be introduced as evidence to contradict, or modify the terms of the written contract.
menace
a person or thing that is likely to cause harm; a threat or danger
Once there is a counter offer, the initial offer is:
Terminated
What are the statute of frauds?
contracts that must be in writing to be enforced. The statute provides that certain contracts are invalid, unless those contracts are in writing, and signed by either the parties to be charge or their agents .
With a counter offer, the offeree becomes who?
The offeror
A counter offer automatically cancels
The original offer if terms of the new offer vary from the original.
Offer and Acceptance: multiple ways to purchase real property include?
A buyer can use different methods to provide an earnest money deposit when purchasing real estate: 1. **Promissory Note**: The buyer promises to pay a certain amount of money to the seller at a later date. 2. **Deed of Trust**: The buyer pledges the property being purchased as collateral to secure the earnest money deposit. 3. **Post-Dated Check**: The buyer gives a check dated for a future date as a guarantee of payment. 4. **Unsecured Promissory Note**: The buyer promises to pay the earnest money without providing collateral. These methods help show the seller that the buyer is serious about purchasing the property.
On a purchase contract when is the date of the contract?
A contract is dated as soon as the offeree communicates back to the buyer that they accept their offer. (Seller) - "we can date this contract now because I finally excepted the offer"
LEGALITY : element for a valid contract (#3)
A contract must be legal. - Both the consideration, and it's objective must also be lawful. Any single thing that is unlawful will void the contract because the law will not enforce an illegal contract. - The courts will not force the completion of a contract if it is illegal. EX: if you bribe a city inspector to accept substandard work (not acceptable work) for $5000 is illegal. You cannot fight in court that the $5000 must be given to you.
What is sufficient consideration?
A contract of anything of value given by one party to another Must be valuable
What is an illusory contract?
A contract that have terms that are NOT definite AND certain, THEREFORE the contract is unenforceable.
Environmental hazards guide
A pamphlet named "environmental hazards : a guide for homebuyers, buyers, landlords, and Tenants" sellers/ sellers agent gives this pamphlet to the buyer that explains hazards such as : asbestos, lead, mold, formaldehyde, and radon.
What is a preliminary title report? Pg149
A preliminary title report is a document that shows if there are any ownership or legal issues related to a property before it is sold. It helps buyers and sellers know about any potential problems with the property's title, like outstanding loans or ownership disputes.
What is errors and omissions insurance?
A professional liability insurance that protects companies and individuals against claims made by clients for inadequate work or negligent actions Brokers will get help to cover any lawsuits through this liability insurance
What is not considered contractual intent?
A social invitation and advertisements in the newspaper is not an offer, it is only an invitation to deal. Therefore, it is not considered contractual intent.
What is a zone disclosure report?
A zone disclosure report provides information about the zoning regulations and land use restrictions applicable to a specific property or area. It typically includes details such as the zoning designation (e.g., residential, commercial, industrial), permitted land uses, building setbacks, height restrictions, and any special zoning overlays or conditions. This report helps buyers understand how they can use the property and any limitations or regulations they need to consider before purchasing.
What is a contract?
An agreement to do or not to do a certain act or service - Every contract consists of a promise, or a set of promises that are enforceable by law A contract can be promised, and two ways : 1. In a expressed manner. 2. In a implied manner.
4) Breach Remedy: specific performance
The party that breached the contract is forced to perform the act if there is no other solution that can be done. BASICALLY: the party who harmed another party is forced to finish what they were told to do in the contract. - this remedy must be mutual - This remedy must be done if dollar damages do not satisfy as an adequate remedy - The contract must have been just and reasonable -The contract must have been based on adequate consideration: the price received for the property must have been fair and reasonable. - performance cannot be done if the contract was created through unfair practices = if the contract was obtained by misrepresentation, concealment, circumvention, or any other unfair practice... no performance
What is adequate consideration?
Basically means that each party needs to have given each other something of the same value. For example: The seller and the buyer need to exchange something of equal value. The seller is giving their home to the buyer The buyer must give something in return, such as $200,000 or other valuable assets.
What if an optionee has a one year option but decides not to exercise their option?
The property owner should seek a quit claim deed and record it, so that the option can be removed from records
Genuine consent (contract is void or voidable by victim) 4💕
This is the final requirement for mutual consent. It states that an offer must be real or genuine. (freely given) - If not, the contract is void or avoidable by the victim.
Water Heater Statement of Compliance (WHS-11)
This mandatory seller disclosure deals with the law requiring water heaters to be strapped, braced or anchored to resist earthquake motion. It's important to check local ordinances for stricter requirements.
Statewide Buyer and Seller Advisory (SBSA)
This non mandatory advisory reminds buyers and sellers of the importance of investigating a property for sale. It lists many property aspects to consider. Advises both buyer and seller of various factors that may affect the decision to buy, different types of inspection that can be obtained, and questions to ask about, or research and information to be disclosed.
What does "time is of the essence" mean?
This phrase emphasizes the requirement that events related to the contract must be performed on time. - this applies to the ENTIRE contract
What does it mean to execute a contract?
To sign a contract
1. Covenant
Covenants our promises between the parties to a contract
Which of the following could be used by a buyer as earnest money deposit in purchasing a real property? A. A promissory note secured by a trustee. B. Post dated check C. An unsecured promissory note D. all of the above
D
Adequate consideration is anything that is?
Valuable, good and sufficient
buyers affidavit FIRPTA compliance
FIRPTA, or the Foreign Investment in Real Property Tax Act, requires foreign individuals selling U.S. real property to pay taxes on the gains. When a foreign seller sells property for $300,000 or more, the buyer is required to withhold a portion of the purchase price and remit it to the IRS to cover potential tax liabilities of the seller. This withholding helps ensure that the IRS receives taxes owed by the foreign seller. Buyers must comply with FIRPTA regulations to avoid potential penalties and liabilities.
If the any of agents fails to disclose any known defects in the property to the buyer, the buyer can:
File civil action against the agent within two years. This is only if the agents know of the defects.
What is first right of refusal?
giving someone the first right to purchase property should the owner decide to sell
Who is the offeree?
person who receives the offer - I may consider your offer if you give me $500,000 for my home. (SELLER)
What is statute of limitations?
provides a time frame which court cases must be filed on certain offenses. If the Statute of Limitations runs out, the case cannot be heard. Any civil action for a breach of contract, must be started within a certain period of time . Laches: basically states that you slept upon your rights and so now you can't do anything about it.
Who is the offerer?
the person who makes the offer - can I offer you money for your home? (BUYER)
fraud
wrongful or criminal deception intended to result in financial or personal gain
If a party was wronged by another party, which four choices do they have as a remedy for a breach of contract?
• Acceptance of Breach • Unilateral Rescission • Action for Dollar Damages • Possible action for specific performance
What is Wire Fraud and Electronics Funds Transfer Advisory?
It is signed by both buyer and seller to prevent fraudulent transactions through technology
What does it mean when it says execution of a contract?
It is the active performing or carrying out the contract
Acceptance : 💕2
It is the consent to the terms by the offeree. - The person receiving the offer excepts the terms and conditions. - acceptance must be made any specific manner if it was specified in the offer - If there is no particular manner of acceptance, then it could be made by any reasonable or usual mode.
What is contractual intent?
It is the intention that exists when a party communicates an offer to another, with the intention of forming a binding contract. - "I definitely want to bind this contract by taking the time to take the necessary steps to make it happen"
What is a novation?
It is the substitution by agreement of both parties to get rid of the new contract for the old one.
CAPACITY : element for a valid contract (#1)
It states that two or more parties must have a legal capacity to contract. Meaning, each of the parties need to have the capability to actually consent to a contract.
Delay or negligence in asserting's one legal right is by any party is called : - it basically states that you must follow statute of limitations, or you will be barred from any legal action.
Laches
Termination of an Offer : 3💕
Many initial offers are rejected out right or by submission of a counter offer. Therefore, during a mutual consent contract, you must consider ways terminate an offer.
After a buyer enters a legally binding contract, they decided to back out of the agreement. The seller can sue the buyer for money damages, must return the deposit to the buyer, and must attempt to resolve the property to another buyer in attempt to:
Minimize damages - always try to figure out ways to minimize the damage morally and legally.
What is a liquidated damages clause?
Money set in advance as compensation, if there was a breach. BASICALLY: money set BEFORE, IF there is a breach. This clause is used because it is usually impractical or difficult to determine the actual damages caused by breach. - This money set before hand guarantees whichever safety for any damages.
Digital real estate, forms and contracts
Most forms now have multiple pages filled on your computer or mobile device Although Eddie broker may use any contractual forms, the reality is at 98% of active sales people are a member of CAR , a member of the local board of realtors and affiliated with their MLS service. Most realtors use car forms
How do you avoid hackers?
Obtain phone and account numbers from escrow officers, property managers, or landlord, at the beginning of the transaction, and do not wire funds before calling originally obtain number and bank routing numbers.
duress
(n.) compulsion by threat; forcible confinement
How many years does a buyer have to file a civil action lawsuit against a an agent who failed to disclose defects?
2 years
It is a good practice to obtain a preliminary title report, or otherwise verify that the owner will be able to convey marketable title
: In simple terms, it means it's a smart idea to get a preliminary title report or make sure that the property owner can legally sell the property to you without any issues. This helps ensure that you'll have clear ownership of the property after you buy it.
What are five ways that it is NOT genuine consent?
1. Fraud: - A person misrepresent a material fact, knowing it is not true, or is carelessly indifferent to the truth of the stated facts. - Contract is void or avoidable, depending on the degree of fraud. 2. Mutual mistake: - When both parties are mistaken, as to the matter of the agreement, or where the subject matter of the contract ceases to exist. - A mistake is void or voidable 3. Duress: - Unlawful detention of a person or that persons property. - EX: threats, forced or more to make a person sign a contract. - voidable by victims 4. Menace: - it is a threat to commit duress. A person who threats of unlawful violent injury to a person, and or his or her character as a party to the contract.. - EX: IF YOU DONT SIGN, I MAY HURT YOU. 5. Undue influence: (found in confidential relationships) - when a person in a position of authority uses that authority to an unfair advantage.
What are eight ways to discharge a contract?
1. Full performance.: a contract is completed. 2. Substantial performance: a contract was discharged when the performance was almost, but not entirely completed. - The courts will accept this as a discharge of the contract, but can result in monetary charges for damages. 3. Partial performance: the work or performance was partially completed. The parties excepted the partial work that was done. 4. Impossibility of performance: the contract, for some reason may be impossible to perform. Ex: a painter could not finish painting the home, because it was destroyed by a fire. - The legality or reason of the purpose may be challenged 5. Agreement between the parties: the parties agreed to mutually discharge the contract, even though it was not completed. - Remember, a mutual agreement not to complete the contract is also a contract: 6. Operation by law (according to statutes) : the law may excuse the parties from contract performance, because of: -illegality -impossibility of performance -rejection by bankruptcy -failure of key contingency - statue of limitation's. 7. Acceptance of a breach: A person will except that you breached the contract - Many people tend to discharge the contract to find a new party to perform the task because contesting it may cause more problems. 8. Breach. (Non performance.) : some contracts can be discharged because of the Non performance of one of the contracting parties.
One of the ways to discharge a contract is through operation of law, what are five ways that the law can excuse a contract?
1. Illegality 2. Impossibility of performance 3. Rejection by bankruptcy. 4. Failure of key contingency. - (did not meet condition in agreement) 5. Statute of limitations. - you did not meet the deadline of your contract
What are 7 ways an offer can be terminated?
1. Lapse of time. - Offeree fails to accept with any prescribed period. ( ex: seller or buyer does not except in a timely manner) 2. Communication of revocation. - offer can be withdrawn any time before the other party has communicated his or her acceptance. - You can withdraw by rejection or counter offer 3. Failure of offeree to fulfill a condition. - A specified condition must be satisfied, and he prescribed manner or the offer is terminated 4. Rejection. - if the offer is rejected, it is terminated 5. Death or insanity of the offer or offeree. - The death of the offeror or offeree voids the offers - if someone becomes insane, it voids the offer 6. Illegality of purpose. - if the conditions or the purpose of a contract or illegal, the contract is terminated 7. Counter offer. - If a counter offer is given or received, it automatically terminate all previous offers.
Part of the element of capacity ; which parties do NOT have the legal capacity to contract?
1. Minors : Unless you are a : - Emancipated Minor - One who has the contractual rights of an adult. 2. A incompetent person. - A person who is judged to be of unsound mind. EX: old age, disability, mental 3. Convicts. - people who have lost their civil rights during their imprisonment EXCEPTION: if you have been excepted by the California adult authority, then you can contract as a convict.
What elements do not make a valid contract?
1. Money (other considerations can be made.) 2. writing.(except for real estate contracts.) 3. Performance
Which six zones do natural hazard disclosure statements cover?
1. Seismic hazard zone. ⚠️ 2. Earthquake fault zone. 🍃 3. Wildland fire zone. 🔥 4. State responsibility area. 👩⚖️ 5. Flood zone. 💦 6. Dam inundation zone.
What factors need to be considered in mutual consent? (4 things)
1. The offer. 2. Acceptance. 3. Termination of an offer. 4. Genuine consent.
What are the two most important forms in a sales transaction?
1. The residential listing agreement (specifically , exclusive authorization, and right to sell ) - contract between listing agent and seller 2. The residential purchase agreement and joint escrow instructions. -contract between buyer and seller
What are some ways to classify a contract? (4 ways)
1. Valid : a operative contract that is binding and enforceable. Even after death. 2. Voidable : it is a contract that can be affirmed or rejected at the option of a party. This contract is bindable until it is rescinded, canceled, or annulled. 3. Void : it is a contract that has no legal force or affect. This contract has no affect or legal force. - EX: a contract with a illegal purpose is void. 4. Unenforceable: a Contract that was valid, but for some reason cannot be enforced in court. - EX: proved to be a legal or was sued upon.
Performance, Discharge and Breach of a contract :
A. Performance of a Contract: - it is the successful completion of a contractual duty, which results in the performers release from any past or future liability. - Anybody who would like to drop out of the picture without terminating the contract may do so under proper circumstances by assignment. - anybody who would like to completely drop out of a contract and create a new one can achieve this through novation. B. Discharge of a contract. - Occurs when a contract has been terminated. - There is multiple ways to discharge a contract from the extremes of full performance (common) or breach of contract (Non performance) - there are eight ways to discharge a contract. C. Breach of contract. - A breach is the failure to perform a contract, in part or in whole without a legal excuse. - you broke the promise
Pg 147 : list of required disclosures
Agent inspection disclosure: Used by agents on properties that do not need to follow standard transfer disclosure statements Buyers affidavit FIRPTA compliance: Document stating whether or not the federal foreign investment in real property tax act withholding is required on the property. CONFIRMATION : real estate agency relationships: Used to comply with California civil code requirements to confirm agency relationships in a transaction. This clause is pre-printed in CAR purchase contracts. Database disclosure (regarding registered sex offenders) : Complies with the requirement, that certain printed information regarding registered sex, offenders to be part of residential real contracts and leases Disclosure and consent for representation of more than one buyer or seller Used to comply with the California civil code. Explains the types of agency relationships. Disclosure regarding real estate agency relationships Home owners guide to earthquake safety According to the Alquist Priolo earthquake fault zoning act: it requires the seller and agent to disclose to the buyer that the property is or maybe situated in a earthquake fault zone Lead paint and lead-based paint hazard disclosure , acknowledgment, and addendum Any homes constructed prior to 1978 must comply with federal requirements for disclosing any known lead based paint. This disclosure is from seller to buyer, or from owner or landlord to tenant Manufactured home and a mobile home, TDS statement It is a statutory form required in the sales of manufactured homes METHAMPHETAMINE CONTAMINATION NOTICE Use my landlord or property owner to notify a tenant or purchaser that the property has been contaminated with methamphetamine (drug lab) MORTGAGE LOAN DISCLOSURE STATEMENT (borrower) Requires any borrowers to disclose they are borro
PROPER WRITING : element for a valid contract (#5)
All contract may be oral, except those specifically required by the statute of frauds to be in writing. - Personal property: a contract can be oral or written HOWEVER: most statute of frauds require that most real estate contracts be in writing
CONSIDERATION : element for a valid contract (#4)
All contracts must have something of value given by one party to another to make the agreement binding. The contracts must : 1. Benefit the person making the contract or another person. 2. Be a lost suffered or agreed to be suffered. 3. Be in agreement not to bring a legal suit. If the price paid is a promise, consideration may be a promise for a promise. Consideration must be of some value.
All real estate contracts need to be in _______ or ________ form, and must be ________ to be enforceable.
All real estate contracts need to be in writing or digital form, and must be signed to be enforcable
What is the back up offer addendum?
Allows the seller to except the back up offers on the property for sale. It must be a greed to buy the listed buyer. Basically says, the seller is allowed to be in contract with other offers just in case the primary offer fails. This allows the seller to prevent from relisting property again. This agreement will only be valid if any previous contracts and related escrows are officially canceled in writing.
3) Breach Remedy: Action for Dollar Damages
BASICALLY: the court requests a fixed amount of money as compensation for the wronged party after the breach. It is only fair because you have lost money therefore you should receive compensation. In most purchase agreements (contract to purchase) there is usually a liquidated damages agreement.
Statute of Limitations
BITCH Create a paper document of this!!!!!!! 🍩
2. Contingencies conditions, or subject to. (An "If" clause in the purchase agreement)
Are provisions by which all parties are released from any obligations of a contract, if I stated condition occurs or fails to occur. BASICALLY: something must be done or something cannot be done for a contract to continue
Real Estate Transfer Disclosure Statement
As required by California Civil Code Sections 1102-1102.14, a transferee (buyer) of residential real property is entitled to a statement from the transferor (seller) which provides information regarding the physical condition of the property. Seller must disclose all material facts and the buyers just comply with diligent visual inspection requirements
What is the BIA?
Buyers Inspection Advisory - it lets the buyers know that we are not responsible for any of the physical conditions of the land and improvement being purchased. - BASICALLY: let's buyers know that we are not responsible, get an inspector! If not? You are acting against the advice of brokers. - The buyer is responsible investigating the condition of the property themselves..
Agent's Inspection Disclosure
California agents are required to conduct a visual inspection (does not include areas that would be deemed as reasonably or normally inaccessible) of a one-to-four-unit property and disclose the material facts to a prospective buyer. If an agent does not comply, a buyer has two years from the date of possession to file suit. Important things to look for include structural defects,deterioration, water or insect damage. - follow TDS requirements
Deceptive acts or statements, used to wrongfully obtain money or property
Duress, fraud, or menace
What is EFT?
Electronic Funds Transfer It is a fraud by criminal hackers to put themselves into escrow transactions .
What are zipforms?
Electronic versions of the California Association of REALTORS (CAR) paper forms that can be downloaded online "FREE" as part of their yearly dues
example of contingency
Here are the simplified steps: 1. The buyer makes an offer to the seller to buy their property but adds a condition that they can only go through with the purchase if they manage to sell their own home first. 2. The seller responds with a counteroffer, agreeing to the buyer's offer but asking to keep marketing the property to potentially get a better offer. 3. The seller gives the buyer the option to remove the condition if another offer comes in, giving the buyer the first chance to decide if they want to proceed with the purchase without selling their current home. 4. The buyer agrees to the terms and immediately puts their own home up for sale. 5. A week later, the seller informs the buyer that they've received a better offer with no conditions attached. 6. The buyer's agent advises the buyer about the pros and cons of removing the condition, helping them decide whether to proceed with the purchase despite not having sold their current home yet.
If a buyer and seller enter into a binding agreement and one of the parties due or becomes incompetent, the contracts stays valid IF?
If it was signed before the party died or became incompetent
MUTUAL CONSENT: element for a valid contract (#2)
It is genuine consent of all the parties. - acceptance does not need to meet the meetings of the mind because the only way parties consent is through words or acts. Courts cannot read minds. - Consent must be genuine and free from fraud or mistake in there must be a true intention to be obligated, or it may be voidable by one or both parties.
What is the seller license to remain in possession addendum? (SIP)
It allows the seller to remain in possession, and use the property after escrow for less than 30 days by obtaining this license. For example: a seller sells their home and needs less than 30 days to pack some things up or get things sorted. After 30 days they must leave.
What is a implied contract? Also known as ostensible.
It is a contract created win an agreement is made by ask and conduct (implication) rather than by words. - contract made by action - EX: you wave a tool to the cashier to imply that you want it on your tab.
What is the transfer disclosure statement?
It is a form that is filled out by the seller that requires the disclosure of the known presence of mold, drug lab, use, military ordinance, and Mello Roos bonds and taxes.
What is a executory contract?
It is a legal agreement which states a contract have yet to be completely performed. - Basically, we are still at an agreement, but the performance was not completely met.
What is an offer? 💕1
It is a persons willingness to enter a contract - Every offer must have contractual intent - every offer must be definite and certain. - if not definite and certain = illusory contract
What is a bilateral contract?
It is a promise for a promise EX: if a home owner offers a painter, $2000 to paint his or her garage and the painter agree to do it - The painter promises to paint the garage while the homeowner promises to give the painter $2000
What is the California residential purchase agreement and Join Escrow instructions?
It is an offer and deposit to purchase a specific property on certain terms and conditions - It also explains the commission to brokers. - It is a contract between the seller and the buyer with more focus on the buyer.
Is payment of money needed as adequate consideration?
NO. Payment does not need to be the only valuable thing for adequate consideration. Anything valuable, good, and sufficient defines consideration .
Is an agreement considered an agreement if there a counteroffer?
No
Does an option guarantee complete ownership?
No, an option in a home does not guarantee complete ownership. Instead, it grants the holder the right to purchase the property at a specified price within a certain timeframe. The option holder has the choice to exercise the option and proceed with the purchase or let the option expire without buying the property. Only when the option is exercised and the purchase is completed does the buyer gain complete ownership of the property.
If a personal property contract like rental agreements is only for one year or less, does it need to be in writing?
No, it does not. Only contracts above a year after the date of signing need to be in writing.
Can the court create a contract for a party, and fix the terms and conditions of any contract?
No, the parties responsible
What are the three phases of the life of a contract?
Phase 1: negotiation - The negotiation period is when the buyer and seller discuss the possibilities of the contract. Phase 2: not yet performed - Executory contract involved - A purchase agreement is made excretory until payment is made and title is transferred. - once transferred it becomes executed - LAND CONTRACTS can be executed for years! Phase 3: completion - The contract has been completed, discharged, or performed. The contract was executed. - A warranty is added to every aspect of the contract to make sure everything has been properly performed - remember that execution of a contract and to execute the contract are different.
Secured Promissory Note
Promise of property in lieu of payment. * Multiple Claims possible * 1st claim has right to property
spectrometer measures
Radon gas
Why do brokers use counter offers instead of making a whole new offer?
Rather than preparing a whole new purchase agreement, when presenting a counter offer, sellers and buyers prefer to use a standard form called: BCO form: buyer counter offer form SCO form: seller counter offer form - these forms are used to change some of the terms of the original purchase agreement and allows the seller and buyer to accept the remaining agreed to terms and conditions of the original agreement. - basically, the counter offer adds new terms while keeping old terms too
What six zones are covered in the natural hazard statement?
Seismic Hazard zone Earthquake fault zone Wild land fire zone State responsibility area Flood zone Dam Inundation zone
Supplemental statutory and contractual disclosures
Some brokers use this form in addition to the "Transfer Disclosure Statement". The form includes the following representations made by the seller, which are not representations of the agents. A. Has there been the death of an occupant of the property upon the property within the last three (3) years? B. Has an order been issued by a government health official stating that the property is contaminated by methamphetamine? C. Has there been the release of an illegal controlled substance on or beneath the property? D Is the property located in or adjacent to an "industrial use" area? E. Is the property located within one (1) mile of a former federal or state ordnance location? F. Is the property a condominium or located in a planned unit development or other common interest subdivision? G. Are there insurance claims affecting the property within the past five (5) years? H. Are there matters affecting title of the property? I. Are there any material facts or defects affecting the property not otherwise disclosed to the buyer? J. Are there any material facts or defects affecting the property not otherwise disclosed to the buyer? Supplemental statutory and contractual disclosures are additional information provided by the seller to the buyer beyond what is legally required. These disclosures typically include details about the property's condition, any known defects, environmental hazards, or other relevant information that could affect the buyer's decision to purchase the property. They aim to ensure transparency and help buyers make informed decisions about the purchase.
Definite and certain means?
That the precise acts to be performed must be clearly stated - This means a court cannot create a contract for the party, nor fix the terms and conditions of any contract. - The party must be clear within themselves about what must be done in the contract.
What is an assignment?
The act of transferring to another all or part of one's rights arising under a contract. The assignor (original party) transfers his or her rights in the contract to another party, called the assignee.
What is the current award percentage for liquidated damages on a purchase agreement form?
The award percentage is a maximum of 3% by law of the home purchase price. FOR EXAMPLE: The seller CHARLIE sold his home through a real estate broker and the broker agreed verbally with Charlie that he would find him a acceptable place to live when the sale was completed. The broker did not keep his promise to the seller . The seller has the option of trying to recover the damages in court action against the broker, through liquidated damages, or action for dollar damages . Charlie 💅 would get only get a MAX of 3% of the home purchase price.
The seller excepting the buyers offer, is communicated to the buyer that a binding contract is formed. Prior to this, it is an offer that can be revoked by who?
The buyer The buyer can revoke
The deposit and liquidated damages: if there is a liquidated, damages, clause, initialed by both the seller and buyer, the seller may retain deposit up to 3% of the sale price. This would then be split 50-50, between who ?
The seller and the listing broker , UNLESS otherwise stated
If there is only a minor change in a term (like sales price) the counter offer can be written on the back of the original purchase agreement and signed by the seller and buyer. The seller can NEVER:
The seller can never change the purchase agreement on its face by crossing out sections, or adding new information - The counteroffer must contain a clause stating that all conditions of the original purchase agreement are acceptable EXCEPT for the NEW LISTED TERMS!
Seller Financing Addendum
The seller financing addendum and disclosure is a document that outlines the terms and conditions of a real estate transaction where the seller provides financing to the buyer instead of or in addition to a traditional mortgage from a bank. It clarifies the details of the financing arrangement, including the loan amount, interest rate, repayment schedule, and any other pertinent terms. Additionally, it discloses any relevant information about the seller's financial position and the property being sold.
Smoke Detector Statement of Compliance
The seller must provide the buyer with a written statement that the property complies with the California legal requirements for properly operating smoke detectors.
Sellers affidavit of non-foreign status/ California withholding exemption
The seller's affidavit of non-foreign status and/or California withholding exemption is a document where the seller declares that they are a U.S. citizen or resident alien and are exempt from certain withholding requirements, such as those imposed by FIRPTA or California withholding laws. It's a way for sellers to confirm their tax status and avoid unnecessary withholding of funds from the sale proceeds.
2) Breach Remedy : unilateral rescission
The wronged party (1) discloses how they were wronged (2) and restores everything of value to the offending party. BASICALLY : even though I was harmed, I want to restore everything back to the party who wronged me because I don't want to do this anymore. Rescission is common during : fraud, mistake, duress, menace, undue, influence, and faulty consideration. Rescission is possible when the contract was unlawful to begin with , or when the parties are not equally at fault, or if the public interest would be hurt. Miners or incompetence, usually rescind their contracts .
1) Breach Remedy : acceptance of breach
The wronged party does not pursue legal action. The wronged party (person who was wronged) may feel as if the damages recoverable are two limited to justify litigation. - sometimes the wronged party believes the offending party is judgment proof, which means they do not have enough assets available to satisfy a judgment. - Sometimes the legal costs, the time, the effort, and the psychological effect is not worth the outcome. BASICALLY: the people who were harmed would rather not go to court because it's not worth it. Litigation : legal action through the court system
Acceptance must be communicated: therefore, silence cannot be interpreted it as an acceptance of an offer.
There must be communicated acceptance of an offer in writing. EX: you cannot say, "if I do not hear from you in 10 days than the offer is considered excepted"
Unsecured Promissory note
When someone promised to pay based on a handshake deal; usually friends and family deal high interest rate; too risky
What takes more precedence (more importance) Written or printed information?
Written information
Can a oral agreement between a broker and an agent, discussing commissions be binding and ? enforceable
YEA, oral agreements are binding when sharing commissions
Do listing agreement need to be in writing?
YES
Can the optionee secure another buyer for the property?
YES: the buyer can sell his or her option to another party during its a term.
Can a seller excepted buyers offer on paper and by email with an electronic signature with a digital contract? Or by signed fax?
Yes yes yes
Can aliens (not citizens of the United States) purchase their own property in California?
Yes, they have the right to : buy, hold, or transfer a real property.
Who should dictate the method by which you fill out and complete the purchase agreement?
Your client
Post dated check
a check with a future date on it
What is a counter offer?
a rejection of the original offer and the simultaneous making of a new offer - once the offeree (seller) rejects the offer, the offeree becomes the offeror of the counter offer EX: as the seller, I do NOT except your offer of $300k. I now want to make an offer for $500k.
